Top Business Financing Mistakes to Avoid in 2016
The U.S. Small Business Administration reports that nearly half of all small businesses don’t survive past their first five years in operation. Among the top reason new businesses fail is largely due to business financing mistakes. Simple mistakes can quickly drive down a once thriving business. As we head into 2016, Business Loans Direct wants to ensure you keep your best foot forward, so we’ve highlighted the top business financing mistakes to avoid this year.
Business owners must be cautious when borrowing money to ensure the money that’s borrowed produces a higher return than the amount of debt from the loan. In light of the Federal Reserve’s recent rate hike, small business owners will be paying more on their existing variable-debt ratio. As a result, business owners must choose borrowing options with the lowest interest rate to maximize their return on their investment, especially when using business credit cards.
Lenders look to both business and personal credit history when approving loan applications. If you’ve neglected to establish a line of business credit or your personal credit isn’t in good standing, this shows lenders that you don’t handle your finances well or don’t plan ahead for emergencies. Before you’re in need of a loan, establish a positive business credit history and keep your personal credit in order to be more appealing to lenders.
Personal and Business Finances
Mixing your personal and business finances together is one of the biggest mistakes you can make because it makes it more difficult to track your profits and losses, causing lenders to not take your business seriously. Not to mention, it’s difficult to prove that you’re able to cover your business expenses from your business alone, making you susceptible to an IRS audit.
When seeking business financing in 2016, you need to ensure all of your ducks are in a row prior to looking for funding. Now, you have various loan options available to help you choose the most appropriate option for your business. With the right loan, you’ll keep your business moving forward in the right direction. If you’re in need of business financing, contact Business Loans Direct today to discuss your options.